Question
“A stranger to contract cannot sue, but a stranger to consideration can sue”. Do you
agree?
Answer :
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Skip in 10
# Stranger to Contract and Stranger to Consideration The statement “a stranger to contract cannot sue, but a stranger to consideration can sue” expresses two important principles of the law of contract under the Indian Contract Act, 1872. The statement is generally correct, but it requires careful explanation because the two expressions refer to different legal situations. The principle of privity of contract means that only a person who is a party to a contract can ordinarily enforce the rights arising from it. On the other hand, under Indian law, consideration may move from the promisee or any other person. Therefore, a person who is not a party to the contract may provide consideration, yet the promisee can still enforce the contract, provided all other legal requirements are satisfied. A contract is an agreement enforceable by law. According to Section 2(h) of the Indian Contract Act, 1872, an agreement enforceable by law is a contract. Consideration is an essential element of a valid contract under Section 10, subject to the exceptions recognised by law. Section 2(d) defines consideration broadly and expressly provides that consideration may move from “the promisee or any other person.” This wording makes Indian law different from the traditional English rule under which consideration generally had to move from the promisee. The first part of the statement deals with the doctrine of privity of contract. According to this doctrine, a person who is not a party to a contract is generally a stranger to the contract and cannot sue upon it, even if the contract was made for his benefit. The rights and obligations created by a contract normally exist only between its parties. Thus, if A enters into a contract with B to pay ₹10,000 to C, C ordinarily cannot sue A for the money merely because the agreement was made for C's benefit. C is a stranger to the contract. The leading case illustrating the English principle of privity is Tweddle v. Atkinson. In that case, the fathers of a bride and bridegroom agreed to pay certain sums to the bridegroom. The bridegroom was not able to enforce the agreement because he was not a party to it. The decision established that a person who is not a party to a contract cannot generally enforce it merely because the contract confers a benefit upon him. The same general principle has been recognised in India. In M.C. Chacko v. State Bank
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